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Strong demand drives Malaysian palm oil stocks to multi year lows

Malaysian palm oil stocks plummeted to their lowest level since 2011 in August according to the latest data release from MPOB, as a 7% MoM increase in crude palm oil (CPO) production failed to outpace a stellar 82% MoM rise in CPO exports. While processed palm oil stocks dropped 6% MoM, crude palm oil stocks plummeted 26% to now sit 50% lower YoY. This brought total palm oil stocks down 41% YoY, while CPO exports were pegged 12% higher than this time last year. Meanwhile, Indonesian palm oil ending stocks for July rose 4.3% MoM to 1.88mn t according to GAPKI, following a 3.4% MoM rise in production, and 7.7% dip in Indonesian CPO, lauric oil, and biodiesel exports.

Malaysian palm oil exports were boosted by a huge increase in Indian offtake in August, which was reported to have doubled MoM according to Intertek. Demand from Asia Oceania also soared, climbing 30% MoM to 307,032 t. However, Malaysian palm oil exports fell 17% MoM during the first ten days of September, dropping to 380,115t according to Intertek data. Malaysian palm oil exports during the first 10 days of September 2015 sat at 517,600t, 27% higher than exports for the same period this year.

Despite the bullish data release, Malaysian palm oil prices in dollar terms are up only 2% MoM, after being pulled 1% lower WoW by weaker export demand through the first 10 days of September and a dip in US soybean prices. Soybean oil prices fell just 1% WoW before the close on Monday, following the as expected bearish USDA WASDE report showing predictions of a bumper harvest across US crops and oilseeds this year. US soybean oil prices climbed 9% this month, leading to soybean oil spreads to palm oil soaring 90%.

NB 13/9/2016

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